The fat lady has sung at last, bringing down the final curtain on the soap opera that has been the Competition Commission Inquiry into the UK grocery market - and the finale turned out to be as disappointing as the previous acts in this long-running saga.
For over two years, the Federation of Wholesale Distributors has sought to focus the regulator's attention on the damaging and anti-competitive cost price differentials that wholesalers suffer by comparison with the major supermarkets.
These were revealed by the report to range up to a 15% disadvantage, but the authors signally failed to make any critical comment on the matter. In their view most everything in the grocery market is hunky dory and consumers are getting a good deal. There were one or two areas of concern that they felt needed to be dealt with. Namely, making it easier for the Big Four supermarkets to compete with each other by changing planning rules, and to give greater protection to suppliers and primary producers (farmers) by establishment of an Ombudsman to oversee a beefed up supermarket code of practice.
But, when it came to levelling the playing field for the independent convenience store operators, and the wholesalers who provide their supply channel, they delivered a resounding zero.
FWD and its allies, such as the Association of Convenience Stores, have battled long and hard to get the Commission to appreciate the reality of what is going on in the marketplace. So it is incredible to find that the CC still believes that the population of convenience stores is actually in growth, rather than having seen a steady decline over recent years.
A huge amount of work in terms of the sheer number of submissions and hearings involved has gone into this inquiry. But it is hard to take the completed report seriously when it includes such nuggets of the CC's thinking as "we thought it unlikely that even if wholesale prices increased, this would lead to higher convenience store prices to consumers." What planet are they living on, one asks?
I think that this abject failure to bring fairness into a dangerously skewed market will come back to haunt the Competition Commission. Meanwhile, FWD members will watch recent developments emanating from the Office of Fair Trading keenly. Its investigations into possible supermarket price rigging over a wide range of categories may yet deliver some well-timed egg on the CC's face.
Will Government proposals to ban the display of tobacco in retail premises damage the wholesale sector?
- 27 November, 2008
FWD Annual Dinner & Gold Medal Awards
